Posted: August 29, 2018
Going Global Series: This is the third in a series of four articles where Greg Allnutt interviews NZ international business leaders to understand the leadership challenges and to share some of their insights.
The opportunities for exporting or going global are obvious, such as entering new markets, better positioning closer to markets, spreading risk, and of course achieving growth and scale. There are any number of challenges that a bank adviser will tell you such as exchange rates and fluctuations, payment terms, logistics time frames, legal requirements, customs and tariffs. But what about the leadership challenge as a key piece to understand? So I took the opportunity to interview four NZ international business leaders that I work closely with, to understand the leadership challenges and to share some of their insights. You will notice some key themes.
Mark Field, CEO at EPL leads a business based in Christchurch and Thailand, exporting across the globe. He has identified several key focus areas: Firstly, research, research, research. Mark said, “If I look back at our move into Thailand our greatest failure was fully understanding how business was conducted, how to set up banking systems, what were the rates of pay, hours of work etc, etc, etc. We asked the questions but often only got part of the answer or got the answer the best served the person providing the answer. In hind sight I would spend considerably more time gathering information from multiple sources and testing that information”.
Understanding the Culture. It is very important to understand the customs and beliefs of the country or countries you are going to operate in. For example, freedom of speech in NZ is considered a right and you can openly criticise the government. In Thailand questioning or criticising the King is considered highly offensive and may get you arrested. Also, a successful leader may have to adapt their style in a leadership role overseas. New Zealanders are encouraged, from an early age to speak their mind, challenge, and to stand out. In Thailand this is actively discouraged and speaking out or suggesting better ways to do something is considered disrespectful. A good leader encourages initiative from their staff however this proves very challenging in Thailand.
Customer Relationships. Customer relationship management may be very different to NZ. Face to face meeting over numerous occasions may be required to gain trust. Emails and phone calls alone are rarely successful. A game of golf with a client is an acceptable way to do business in Asia, where as in NZ this is considered a perk. Gaining a relationship with a customer at a high level is also challenging but needed to win business. There may also be moral challenges, in some countries unofficial payments or gifts is considered or even expected, as an acceptable way do business – and not making a payment or giving a gift may result in roadblocks. The dilemma for a leader is not only personal but what practices their managers and staff might allow versus what is acceptable by the company values.
The Right People. If the business is relocating a person overseas the impact on the persons spouse and children needs to factored in. Whilst an overseas posting is considered an adventure the reality is that is very difficult and in some cases several marriages have ended because of relocation. It maybe a balance or combination of the right local and expat existing staff. Leadership in the new location will significantly determine the success of the new office. Be very specific as to who is taking the lead and what qualities you are really after.
Monitor your business very closely. A business setting up overseas needs to have very robust systems in place to monitor business activities, both financially and holistically. Ensure active visit schedules, good authority schedules, robust KPI’s and strong financial management. Bad news or results are often hidden. Remember that setting up a business overseas puts strain local resources.
This blog was written by Greg Allnutt, Strategic Advisor at Advisory Works.
For many New Zealand businesses, especially those in manufacturing, primary goods, or IT sectors, at some point early in their business life cycle, consideration for becoming a global enterprise is a serious option, and I predict that this probably before businesses of a comparative size in other countries need to face this same challenge. Part of this is that New Zealand only has a domestic market of about 4 million people, the equivalent size of some small cities around the world, and so to grow and scale they need to enter foreign markets and lead global businesses. As such nearly a third of all NZ small to medium business (ie 25% employing 6-19 and 28% of those with 20+ employees) are exporters. And they export to Australia, China, US, Japan and UK, and many many others.
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